CALGARY, ALBERTA--(Marketwire - July 2, 2009) - Excelsior Energy Limited (TSX VENTURE:ELE) ("Excelsior" or the "Company") Excelsior has submitted a joint application to Alberta Environment and the Alberta Energy Resources Conversation Board seeking regulatory approval for the Hangingstone Experimental In Situ Combustion project ("the Project"). Excelsior is proposing to construct and operate an experimental bitumen recovery scheme on a portion of the Company's Hangingstone asset in the Athabasca Oil Sands Region approximately 27 kilometres south of Fort McMurray.

The objective of the Project is to test the efficiency of combustion overhead gravity drainage (COGD) recovery process in a field pilot as a viable and economically advantageous alternative to Steam Assisted Gravity Drainage recovery (SAGD). COGD is a proprietary technology developed by Excelsior and its technical advisors Hot-Tec Energy Inc. ("Hot-Tec"). Hot-Tec is a private company affiliated with members of the In Situ Combustion Research Group, Department of Chemical and Petroleum Engineering, Schulich School of Engineering, University of Calgary. The combustion laboratory at the University of Calgary is the world's largest, highest capacity experimental combustion facility.

"This is an important milestone for Excelsior and the next step towards commercialisation of the Hangingstone property. Successful in situ combustion could significantly improve the sustainability and economics of in situ bitumen recovery" commented Robert Bailey, Chief Operating Officer," The high quality resource at Hangingstone is close to developed infrastructure and is the perfect location for an experimental project, and with success could be readily expanded to a larger commercial scale operation."

Over the last year Excelsior has collected all the necessary data to meet all regulatory requirements for the Project Application. These include:

- Well results from 55 wells that have been drilled to date on the Hangingstone property, of which 13 wells were located within in the Project Area. All of the wells were fully cored to characterise the reservoir geology and to gather reservoir quality data to support engineering modelling and COGD well array placement;

- front end engineering and design for the Project Facilities;

- detailed environmental studies;

- COGD well array design and engineering;

- extensive hydrogeology and water source studies which included a successful water test of a non-potable water aquifer adequate to meet the process water needs of the Project;

- reservoir modelling to predict reservoir facies and quality across the Project Area;

- stakeholder consultation.

The Project is designed to produce up to 1,000 barrels of bitumen per day and will target a high quality reservoir section with an average net continuous pay thickness greater than 25 meters, in the McMurray Formation over a development area of 56 acres. The development area represents less than 1% of the area of mapped exploitable pay on the Hangingstone property. The Project location has been chosen close to existing infrastructure to minimize surface disturbance. Operation of the Project is scheduled to commence in 2011 after regulatory approval and completion of construction operations. Approvals have been requested to operate the Project for 4 years. A confidentiality period for Project data has been proposed in accord with the Alberta Oil Sands Conservation Regulations.

The COGD process requires a well network that consists of a horizontal drain completed low in the reservoir; an array of vertical air injection wells positioned above the horizontal drain, observation wells positioned to monitor temperature profiles during combustion operations, and vent wells positioned on the flanks of the combustion zone. During combustion operations air is injected into the injection wells; combustion gases are segregated high in the reservoir and captured for removal at the vent wells and melted bitumen and condensed water flow by gravity to the horizontal drain. Injection wells and vent wells can also be adjusted to manage the flux and distribution of air in the reservoir, and to control the geometry of the combustion chamber.

COGD uses a portion of the in-situ bitumen as fuel for thermal energy. COGD does not require cycling of large quantities of water or access to large volumes of fuel gas. If a successful field trial can be implemented the technology will be applied to the entire Hangingstone asset. Management estimates that there are a gross 1.6 billion barrels of exploitable petroleum-initially-in-place on the operated Hangingstone property which could translate into 400 - 600 MMbbls recoverable bitumen. Excelsior is the operator and has a 75% working interest in the Hangingstone property.

In addition, Excelsior applied to Alberta Energy in September 2008 for a Project royalty credit under the Innovative Energy Technology Program. If the application is successful the first $10 million of Project investment will be offset by a royalty credit.

The Project application document will be available for public viewing on Excelsior's website within 10 days and it will also be available on the AERCB websites

About Excelsior Energy

Excelsior is an early stage, oil sands company with 58 operated sections on two contiguous blocks in the Hangingstone and West Surmont areas of the Athabasca Oil Sands Region near Fort McMurray, Alberta. The Company has developed a proprietary in situ combustion technology ("Combustion Overhead Gravity Drainage" or "COGD") which has game-changing potential in the development and recovery of heavy oil and bitumen. An application for an experimental pilot project to field demonstrate the COGD technology has been submitted to Alberta Environment and Alberta Energy Resources Conservation Board with a targeted project start up in early 2011. In addition the Company indirectly holds a 100% working interest in UK North Sea Licences P1500 and P1691 covering four part-blocks through its 75% owned subsidiary ENS Energy Ltd. Excelsior's strategy is to capture oil and gas appraisal and development opportunities where we can leverage Management's diverse international operating, heavy oil and field development expertise with developing technologies to produce oil and gas.

This press release contains forward-looking statements. Management's assessment of future plans and operations, expected production levels, operating costs, capital expenditures, the nature of capital expenditures, methods of financing capital expenditures, future engineering reports and the timing of increases in production may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward looking statements contained in this press release are made as at the date of this press release and the Company does not undertake any obligation to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.